This chapter is from the book

Technological changes, according to Schumpeter, are like a series of explosions with innovations concentrating in specific sectors, or leading-edge industries that provide the momentum for future prosperity replacing each other in a regular, periodic way. Leading sectors propel economies forward; without them, economic growth would not be possible. According to Schumpeter, the process of technological transformation should be called “creative destruction,”1 given that a set of superior technologies supplants inferior technologies and becomes dominant at their expense. The lagging sectors fall behind, and their time passes, while the new set of technologies surge ahead and, according to Schumpeter, spur economic renewal and revitalization.

In the world’s industrial nations, a dynamic growth phase existed after the Second World War. However, by the start of 1970s, global growth slipped. The post-World War II boom in advanced industrial nations lost momentum. The need existed for a new set of advanced technologies.

The Powers of the Mind

Sociologist Daniel Bell has described the shift away from the technologies that dominated the postwar boom as post-industrialism. In this period, theoretical knowledge formed the source of innovation, while technically trained professionals became dominant and technological assessment played a leading role.

The powers of the mind gained ascendance over the brute force of things. Previously, economic activity was centered on physical labor, natural resources, and capital. Now, wealth in the form of physical resources is losing ground to wealth in the form of ideas. An example is the microchip, the key element in the emergence of information technology (IT); (see Chapter 9, “Missing the Boat on Mobile Technology: Intel and AMD”), where material costs constituted just 2 percent of production costs and most of the value came from the ideas for the design of the microchips. Other examples include medical technologies, genetics, alternative energy, artificial intelligence, material sciences, and nanotechnology. The main value is not in the materials, but in the ideas. This chapter briefly discusses the promise of these technologies, whereas the next chapter considers concrete examples of efforts to commercialize such technologies and the problems they have encountered.